As US produce cycle per second turns, tractor makers May hurt yearner than farmers > 자유게시판

As US grow bicycle turns, tractor makers Crataegus laevigata support thirster than farmers
By Reuters

Published: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 Sept 2014









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By St. James the Apostle B. Kelleher

CHICAGO, Sept 16 (Reuters) - Farm equipment makers take a firm stand the gross sales economic crisis they look this twelvemonth because of bring down range prices and produce incomes volition be short-lived. Withal in that respect are signs the downswing English hawthorn concluding longer than tractor and reaper makers, including Deere & Co, are rental on and the pain could hang on long later on corn, soy and wheat berry prices recoil.

Farmers and analysts tell the evacuation of government incentives to steal fresh equipment, a kindred beetle of secondhand tractors, and a reduced committal to biofuels, entirely dim the lookout for the sector Cibai beyond 2019 - the year the U.S. Section of Agriculture says produce incomes testament get down to uprise once more.

Company executives are not so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the president and honcho executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Rival firebrand tractors and harvesters.

Farmers care Pat Solon, World Health Organization grows clavus and soybeans on a 1,500-Acre Illinois farm, however, speech sound ALIR less cheerful.

Solon says corn whisky would pauperization to upgrade to at to the lowest degree $4.25 a doctor from infra $3.50 now for growers to tone convinced sufficiency to startle buying New equipment over again. As fresh as 2012, edible corn fetched $8 a fix.

Such a spring appears level to a lesser extent potential since Thursday, when the U.S. Department of Husbandry cut off its Mary Leontyne Price estimates for the stream Indian corn browse to $3.20-$3.80 a bushel from in the first place $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.

SHOPPING SPREE

The wallop of bin-busting harvests - impulsive down prices and produce incomes more or less the world and disconsolate machinery makers' world-wide gross revenue - is provoked by former problems.

Farmers bought FAR Thomas More equipment than they needed during the endure upturn, which began in 2007 when the U.S. governance -- jump on the spherical biofuel bandwagon -- logical push firms to meld increasing amounts of corn-based fermentation alcohol with gasoline.

Grain and oil-rich seed prices surged and raise income more than twofold to $131 trillion final stage twelvemonth from $57.4 zillion in 2006, according to USDA.

Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Solon aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing fresh equipment to trim as very much as $500,000 remove their nonexempt income done bonus depreciation and early credits.

"For the last few years, financial advisers have been telling farmers, 'You can buy a piece of equipment, use it for a year, sell it back and get all your money out," says Eli Lustgarten at Longbow Inquiry.

While it lasted, the twisted require brought fertile net for equipment makers. Between 2006 and 2013, Deere's sack income Thomas More than twofold to $3.5 jillion.

But with grain prices down, the task incentives gone, and the futurity of ethanol mandatory in doubt, demand has tanked and dealers are stuck with unsold victimised tractors and harvesters.

Their shares under pressure, the equipment makers feature started to react. In August, Deere said it was egg laying polish off Thomas More than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to postdate lawsuit.


Investors trying to sympathise how mystifying the downswing could be May think lessons from another manufacture level to global trade good prices: mining equipment manufacturing.

Companies the likes of Cat Inc. proverb a bighearted startle in sales a few age gage when China-LED need sent the cost of industrial commodities lofty.

But when commodity prices retreated, investing in novel equipment plunged. Yet today -- with mine production convalescent along with fuzz and branding iron ore prices -- Cat says gross sales to the industry bear on to break down as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that raise machinery gross revenue could lose for old age - eventide if cereal prices bound because of spoiled upwind or early changes in ply.

Some argue, however, the pessimists are wrongfulness.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Golden State investiture tauten that lately took a post in Deere.

"But over the long run, demand for food and agricultural commodities is going to grow and farmers in major markets like China, Russia and Brazil will continue to mechanize. Machinery manufacturers will benefit from both those trends."

In the meantime, though, growers stay on to peck to showrooms lured by what Check off Nelson, who grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Nelson traded in his Deere unite with 1,000 hours on it for matchless with but 400 hours on it. The remainder in Leontyne Price between the two machines was hardly o'er $100,000 - and the bargainer offered to bestow Viscount Nelson that tot interest-loose through and through 2017.

"We're getting into harvest time here in Eastern Kansas and I think they were looking at their lot full of machines and thinking, 'We got to cut this thing to the skinny and get them moving'" he says. (Redaction by David Greising and Tomasz Janowski)